Among stocks on the move, Royal Bank of Scotland rose as the company said it's part of a group that plans to buy a 10% stake in Bank of China. Diageo rose after Morgan Stanley raised its recommendation on the stock to overweight from equal-weight. EMI Group rose after Credit Suisse First Boston upgraded the stock to outperform from neutral. GlaxoSmithKline rose after JP Morgan raised its rating on shares to neutral from underweight.

Germany's DAX index fell 20.19 points, or 0.41%, to 4,851.27, following a report that the Eurozone consumer price index was up 2.2% vs. the same period a year ago, while the core index unexpectedly fell to 1.3%.

AWD Holding fell as the company said it headed for its biggest decline in a year. Fielmann rose as Deutsche Bank raised its price estimate for the shares. Infineon Technologies rose as Deutsche Bank raised its price estimate for the shares.

In Paris, the CAC 40 index dropped 9.56 points, or 0.22%, to 4,430.07, as oil prices in Europe edged higher.

Dexia fell after Lehman Brothers lowered its rating on stock to underweight from equal weight. L'Oreal rose after Smith Barney raised its rating on stock to buy from hold. Suez fell after WestLB cut its rating on stock to underperform from outperform.

Asian markets ended mixed Wednesday.

Japan's Nikkei 225 index rose 34.25 points, or 0.28%, to 12,307.37.

Ryohin Keikaku (+2.8%) went up after the clothing and household goods maker reported a 30% growth in interim earnings. TV Tokyo surged 9.4% on news that Livedoor Co's (+9.5%) president had bought 5% stake in it. On the downside, oil producer Teikoku Oil dropped 3.2% after crude prices sank over 4% in New York trade. Oil developer AOC Holdings also slid 3.6%.

Meanwhile in Hong Kong and South Korea, stocks plunged. The Hang Seng index finished down 301.49 points, or 1.95% to 15,148.09, with blue chips down across the board. Profit-taking was a major cause, says Standard & Poor's MarketScope, but large warrants contracts this week also spurred on the selling.

In South Korea, tech heavyweights Samsung Electronics and Hynix Semiconductor were down 2.97% and 2.71%, respectively.